ASK THE M&A PRO -- STACY FEINER

When and how do I tell my employees that I am selling my business?

Blog Entry: February 13, 2013 4:30 AM | Author: STACY FEINER

Dr. Stacy Feiner is an adviser and coach at Ratliff & Taylor with a coaching methodology that appeals to business owners and corporate executives in various stages of the business cycle. For more than 15 years, Dr. Feiner has been helping business leaders take deliberate steps to improve their performance and advance their organizations.

This is often a looming question that keeps business owners up at night. Left unanswered, this question actually gets in the way of business owners moving forward on plans to transition out of their companies.

Rule one: Protect the integrity of the deal. Apply strict confidentiality around the details of negotiations, agreements and involved parties until the ink dries.

At the point of sale, have a communication plan prepared to deliver to your constituents that accurately reflects your company's culture and your values. Remember to whom you will be communicating: families of employees, customers, vendors, industry media and financial partners.

Don't confuse “strict confidentiality” with “keeping employees in the dark.” Private is useful. Secretive is deceptive.

Rule two: Protect the integrity of the company. Be transparent about your vision for the company's sustainable future after you leave. Transparency of the vision will gain employee confidence as well as mitigate the risk of employees “bailing out.” Often the future leader will have a bigger vision, more capital and an updated strategy that will stimulate growth and new opportunity in ways that benefit employees.

Remember the climate has changed dramatically, and employees are not so easily alarmed by the idea of the owner selling. Just as often, they welcome the change.

Rule three: Protect the legacy of the owner. Apply principles of employee engagement in order to: 1) strengthen the workforce to withstand the challenges inherent in a transaction, 2) exploit an underutilized opportunity for value enhancement, 3) and be remembered as a leader of a great company who valued people.

Employee engagement is determined by the degree to which employees view themselves as having clear objectives, the right tools to accomplish the objectives, a feeling of being valued and a belief that they can grow. This is an often overlooked tool for increasing the value of your company.

In summary, your question should be answered in ways that reward your key stakeholders: the buyer, the employees and the owner (you). Viewed from this vantage point, the question should be inspiring rather than daunting, and the steps necessary to implement this inspired plan are completely feasible with forward-thinking advisers.

Rather than focusing on the transaction, turn your attention to the TRANSITION: There is the pre-sale, which will be all about your business. There is the transaction, which is all about “the deal” at a point in time. And then there is your future, the most valuable possession with which you will walk away.

Good exit planning is the difference between selling a business and creating your legacy. It is a process that aligns your financial goals, business goals and personal goals, and clarifies what your success has paved the way for. Don't worry about how you're going to get this done right; instead, set out to do it right!

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